Samsung lawsuits against Apple over 3G patents could backfire

Samsung is making no bones about its intention intensify its legal fight with …

Samsung has officially stated that it plans to bring the hammer down on Apple's "free riding" on its patented 3G wireless technology. Among its latest moves is a lawsuit seeking to ban Apple's iPhones in The Netherlands, where Apple recently won an injunction barring Samsung from selling its Galaxy S-series devices in the European Union. Because the patents in question are essential to 3G standards, however, Samsung's strategy to sue over these patents may not be as successful as it hopes.

Unnamed Samsung executives were quoted last week claiming that the company planned to intensify its global legal fight with Apple over smartphone- and tablet-related IP. "[A]s long as Apple does not drop mobile telecommunications functions, it would be impossible for it to sell its i-branded products without using our patents," one executive told The Korea Times. "We will stick to a strong stance against Apple during the lingering legal fights."

Those same sentiments were echoed by Samsung senior vice president Lee Younghee in a recent interview with the Associated Press. She characterized Samsung's legal maneuvers against Apple since Apple launched a massive lawsuit against the company's Galaxy-branded devices in April as "passive." Now, however, Samsung "[will] be pursuing our rights for this in a more aggressive way from now on," Lee said.

Part of that new strategy is an aggressive lawsuit against Apple in the Netherlands, which seeks to ban import and sale of Apple's iPhones. Samsung claims that Apple's smartphones infringe on four European patents related to 3G technology. Those patents are "standards essential," part of the 3G wireless standards used by nearly all mobile phones now sold.

Samsung claims Apple (or any mobile phone maker) can't sell a 3G-compatible device without using Samsung's patented technology. However, such patents are typically encumbered by FRAND licensing agreements, wherein standards-setting organizations agree to use patented technologies from companies involved in the standards-setting process in exchange for an agreement that anyone using the standard can license the patents on "fair, reasonable, and non-discriminatory" terms.

Samsung has already aimed similar FRAND-encumbered patents against Apple in the US, UK, France, Australia, Japan, and South Korea. The company even claims to be ready to have Apple's next-generation iPhone 5 banned in Korea for infringing Samsung's wireless technology patents.

Samsung claims that numerous other manufacturers have licensed these patents while Apple has not, but Samsung apparently never made any offer to license the patents to Apple on FRAND or any terms according to legal briefs filed by Apple in US court. Furthermore, Samsung's use of FRAND-encumbered patents against Apple could constitute a violation of antitrust laws both here and in the EU. At least, that's the argument Apple is making. From our conversations with several IP experts, our understanding is that suing over FRAND-encumbered patents is frowned upon by courts in the EU in particular.

Meanwhile, Samsung still must deal with the fact that Apple is its number one customer for flash memory, processors, and other components. As we suggested, Samsung may have decided to become more aggressive after discovering that Apple is looking to move to other manufacturers to fab its custom-designed mobile processors. DigiTimes recently reported that Apple was also looking to secure memory from other suppliers, as well. If Apple is shifting its supply chain away from Samsung, the company may have decided it doesn't have much to lose using FRAND-encumbered patents in retaliation against Apple's recent injunctions.

I know Samsung is a very successful international company, but their moves lately make them come across as a bunch of amateurs. Is their legal team just not very good? Is the board willfully ignoring their legal teams advice? Something doesn't add up...

I know Samsung is a very successful international company, but their moves lately make them come across as a bunch of amateurs. Is their legal team just not very good? Is the board willfully ignoring their legal teams advice? Something doesn't add up...

they have lost a considerable amount of face, and must been seen doing something.

I know Samsung is a very successful international company, but their moves lately make them come across as a bunch of amateurs. Is their legal team just not very good? Is the board willfully ignoring their legal teams advice? Something doesn't add up...

Or may be Samsung did blatantly copy and violated Apple patents, and the only thing they can fight back with are FRAND patents. S

Wow so this suit will cost Samsung more in lawyer fees than the FRAND terms will net them. Smooth move. Especially since the encumbrance specifically prevents them from doing what they're trying to do, which is prohibit import to the EU. The very worst case is Apple has to pay the standard, non-discriminatory fee to license them. That's it. Way to intensify the fight, and it won't do anything to break Apple's death grip they have with their patents, since they're not similarly encumbered... This is just stupid.

Lot of assumptions in this article. Since Apple doesn't care about upsetting their supplier relationship, why should Samsung care about Apple. They are already selling more smartphones and are growing at 700% year over year. I'm sure they can thrive after kicking Apple to the curb. I saying hit Apple with all you got. Who cares if judges frown, somewhere the argument will be found valid and Apple will get stung.

This whole thing is nuts for Samsung. Apple bought almost $8 billion in parts from them last year, and that was expected to exceed $10 billion next year. They will lose a very large part of this business, which is pretty profitable for them, for what? They make little if anything on their phones. Their tablets aren't doing as well as some people think, from what the evidence shows.

And yet, they felt they just HAD to copy enough from Apple, their largest customer, to get themselves in trouble. Is this competent management?

And as for their passivity; they've already countersued in every venue Apple has sued them.

Are they going to sue Microsoft who is working on getting them to pay a license fee for every smartphone they make?

How about suing Google for misleading them over the freedom from licensing fees and encumbrances from other IP? That's going to cost them more than anything Apple is doing to them, which is just a bit of change in design.

Whether standards organizations were involved or not, the typical pattern in the software industry has been to negotiate patent agreements on fair and non discriminatory terms. Of course, the royalty charged under those terms is typically more than reasonable for the real value of most of these patents. Apple appears to have broken with this practice and wants to use its patents to exclude other vendors from the phone or tablet business. Typically these FRAND promises have some kind of clause that requires mutual licensing of patents. Samsung might have some kind of case against Apple if Apple is not willing to license its patents to Samsung on the same kind of terms.

Lot of assumptions in this article. Since Apple doesn't care about upsetting their supplier relationship, why should Samsung care about Apple. They are already selling more smartphones and are growing at 700% year over year. I'm sure they can thrive after kicking Apple to the curb. I saying hit Apple with all you got. Who cares if judges frown, somewhere the argument will be found valid and Apple will get stung.

Don't kid yourself. They aren't doing that well. Most of these sales numbers are just estimates, not real numbers. This past quarter, Samsung was estimated to have sold between 18.1-21.2 million smartphones, but they only sold 17.3 million. We're now seeing that their tablet sales may be just a fraction of what has been believed.

Edit: Oops! I should have said "shipped" instead of "sold". We have no idea as to how many they actually sold.

And we know that their profits from phones is tiny. In fact, they had a poor quarter, with profits down. The sales to Apple were one of the bright spots in their portfolio. It was expected to grow at a good clip. But they've destroyed that avenue of growth fir the dubious distinction of shipping products that copy their biggest customer's products. Where much of those products parts came from Samsung.

This whole thing is nuts for Samsung. Apple bought almost $8 billion in parts from them last year, and that was expected to exceed $10 billion next year. They will lose a very large part of this business, which is pretty profitable for them, for what? They make little if anything on their phones. Their tablets aren't doing as well as some people think, from what the evidence shows.

And yet, they felt they just HAD to copy enough from Apple, their largest customer, to get themselves in trouble. Is this competent management?

And as for their passivity; they've already countersued in every venue Apple has sued them.

Are they going to sue Microsoft who is working on getting them to pay a license fee for every smartphone they make?

How about suing Google for misleading them over the freedom from licensing fees and encumbrances from other IP? That's going to cost them more than anything Apple is doing to them, which is just a bit of change in design.

Apple is already leaving Samsung. Also, Samsung will sell more smartphones (if they don't get injuncted) than Apple next year, not sure how they are making little from selling (more of) their own phones than (less) from Apple.

I'd assume that because owning a patent that covers everyone in a certain market ( 3G ) means you have a monopoly on that market, after all if you were allowed to refuse to license the technology to anyone then you'd be the only one able to sell a 3G device.

Apple are going for the throat now with the patent wars, raising the stakes way beyond the prior skirmishes that the big players had with each other. Therefore Samsung is showing that they still have teeth and I'm sure they'll be arguing that if Apple refuse to agree to cross licensing on patents which give them a virtual monopoly on the way things are done then Samsung should be able to use their own monopoly patents to fight back.

Glad to see this kind of thing escalating into farcical situations since it just hastens the time that patents need to be looked at properly.

Furthermore, Samsung's use of FRAND-encumbered patents against Apple could constitute a violation of antitrust laws both here and in the EU.

Someone please educate me. I thought in order for anti-trust issues to be levied, the accused has to possess dominance within the market in question?

Anthony, you cannot get more dominant then the actual wireless standards themselves. That's what these FRAND patents are about, not about any phone in particular, but about the actual GSM/3G standards themselves, period. Asserting control over those standards is asserting control over every single phone using those worldwide, regardless of manufacturer. It doesn't matter at all how much or how little Apple is selling in this case, at least if these patents were part of the FRAND pool.

This whole thing is nuts for Samsung. Apple bought almost $8 billion in parts from them last year, and that was expected to exceed $10 billion next year. They will lose a very large part of this business, which is pretty profitable for them, for what? They make little if anything on their phones. Their tablets aren't doing as well as some people think, from what the evidence shows.

And yet, they felt they just HAD to copy enough from Apple, their largest customer, to get themselves in trouble. Is this competent management?

And as for their passivity; they've already countersued in every venue Apple has sued them.

Are they going to sue Microsoft who is working on getting them to pay a license fee for every smartphone they make?

How about suing Google for misleading them over the freedom from licensing fees and encumbrances from other IP? That's going to cost them more than anything Apple is doing to them, which is just a bit of change in design.

Apple is already leaving Samsung. Also, Samsung will sell more smartphones (if they don't get injuncted) than Apple next year, not sure how they are making little from selling (more of) their own phones than (less) from Apple.

It's a guess as to how many they will ship. Now that they stated that they will no longer announce how many tablets or phones they ship, we will all be guessing. Companies begin doing this when shipments and sales aren't meeting estimates, and they don't want anyone to know that.

Apple is estimated to be making close to 66% of the profit in the entire cell industry. That includes smartphones, feature phones, and dumb phones. As Samsung has a large percentage of the entire cell business, just behind Nokia, and Apple is small, that should give you a very good idea of what is happening there.

How is this worse than Apple winning injunctions based on its claimed ownership to make rectangular devices.

A) Now you're just making stuff up, which doesn't really help your case.B) You're seriously comparing assertion of some easily circumventable design patents (you don't see WP7 or standard Honeycomb or WebOS or whatever having any trouble, since they actually have unique, and superior I might add, designs) to Samsung asserting control over every single possible 3G device? That's kind of a major difference.

Furthermore, Samsung's use of FRAND-encumbered patents against Apple could constitute a violation of antitrust laws both here and in the EU.

Someone please educate me. I thought in order for anti-trust issues to be levied, the accused has to possess dominance within the market in question?

Anthony, you cannot get more dominant then the actual wireless standards themselves. That's what these FRAND patents are about, not about any phone in particular, but about the actual GSM/3G standards themselves, period. Asserting control over those standards is asserting control over every single phone using those worldwide, regardless of manufacturer. It doesn't matter at all how much or how little Apple is selling in this case, at least if these patents were part of the FRAND pool.

Thanks for the explanation, Xoa. I haven't read the patent in question, but is it simply impossible to create a new standard to achieve the same results? I know patents by large companies, in general, try to be as vague as possible to net as many infringers as they can.. but I'm curious if there is simply no way around infringement? For instance, disable use of 3G and rely solely on 4G IS possible (albeit unrealistically limiting to a phone)?

Furthermore, Samsung's use of FRAND-encumbered patents against Apple could constitute a violation of antitrust laws both here and in the EU.

Someone please educate me. I thought in order for anti-trust issues to be levied, the accused has to possess dominance within the market in question?

If that's so, what's all these claims that iPhone is the highest selling individual mobile handset?

Serious questions; I just want to understand.

Apple sells about 20% of the worlds smartphones. They aren't dominant in sales.

But FRAND patents are patents that are required for the building of certain devices. In other words, Samsung could design a tablet or phone that looks a bit different, and sidestep Apple's patents, and their problem would go away. So Apple's patents prevent anyone from copying their design, it doesn't stop anyone from designing a tablet or phone.

But FRAND patents cover things such as the way a radio must function. Everyone building a radio needs to do it that way. There is no other way. therefor, the company that owns those patents can have anti-trust issues if it refuses to license those patents out equably. They are not allowed to use FRAND patents in lawsuits over other issues.

Samsung is retarded. First they blatantly copy Apple's design (which is one of Apple's primary differentiating factors as a brand), and when slapped in the face, they decide to "intensify" the fight.

Seriously Samsung, you got your ass handed to you for being a copycat. Better sit the $%&# down and know your place.

Apple filed a bunch of stupid suits without any real merit, so samsung filed a bunch of stupid suits without any real merit in return. It's pretty normal procedure among large tech companies. The stupid part is that these patents are essential to the 3G standard, so they are more restricted.

What a mess these two companies are in. Samsung is certainly finding itself in a very difficult position, having the imminent loss of such a big supply customer looming over them.

It makes me wonder what the future might hold for another Apple supplier, LG. LG supplies a ton of their screen technology but you can see the same conflict of interest looming over that partnership too. I understand that there is big differences, for one LG isn't as big a competitor and their products don't sometimes have uncanny hints of following Apples lead, but still...

Maybe this is why Apple has been investing heavily in some Japanese panel companies in the last several years, seems they (Hitachi, Sony) aren't nearly as competitive in the same market (and in that case it seems like a partnership more)

How is this worse than Apple winning injunctions based on its claimed ownership to make rectangular devices.

A) Now you're just making stuff up, which doesn't really help your case.B) You're seriously comparing assertion of some easily circumventable design patents (you don't see WP7 or standard Honeycomb or WebOS or whatever having any trouble, since they actually have unique, and superior I might add, designs) to Samsung asserting control over every single possible 3G device? That's kind of a major difference.

Galaxy Tab is standard Honeycomb, and Apple got the injuction solely based on the "Community Design" of a rectangular, thin, with a bezel and round corners shaped device.

Furthermore, Samsung's use of FRAND-encumbered patents against Apple could constitute a violation of antitrust laws both here and in the EU.

Someone please educate me. I thought in order for anti-trust issues to be levied, the accused has to possess dominance within the market in question?

Anthony, you cannot get more dominant then the actual wireless standards themselves. That's what these FRAND patents are about, not about any phone in particular, but about the actual GSM/3G standards themselves, period. Asserting control over those standards is asserting control over every single phone using those worldwide, regardless of manufacturer. It doesn't matter at all how much or how little Apple is selling in this case, at least if these patents were part of the FRAND pool.

Thanks for the explanation, Xoa. I haven't read the patent in question, but is it simply impossible to create a new standard to achieve the same results? I know patents by large companies, in general, try to be as vague as possible to net as many infringers as they can.. but I'm curious if there is simply no way around infringement? For instance, disable use of 3G and rely solely on 4G IS possible (albeit unrealistically limiting to a phone)?

It isn't that simple. If there is one way to do something, and someone invented it, and was granted a patent, then people must license that patent. Those kinds of patents are FRAND patents. So that company must(under certain circumstances) license that patent to all, fairly.

What you are asking is basically impossible. 3G will be required for some time. Possibly until the patents from the many companies that hold 3G patents expire. And now, Apple own patents in 4G, LTE and possibly 3G.

Apple sells about 20% of the worlds smartphones. They aren't dominant in sales.

But FRAND patents are patents that are required for the building of certain devices. In other words, Samsung could design a tablet or phone that looks a bit different, and sidestep Apple's patents, and their problem would go away. So Apple's patents prevent anyone from copying their design, it doesn't stop anyone from designing a tablet or phone.

Well, it's quite likely that you couldn't build a tablet or phone that is remotely competitive without infringing Apple's patents. However, unlike '3G', 'smartphones that don't suck ass' is not an established standard, so Apple has the upper hand despite its patents likely having LESS merit.

Whether standards organizations were involved or not, the typical pattern in the software industry has been to negotiate patent agreements on fair and non discriminatory terms.

What? Support this. I have yet to see such a thing ever happen outside of a standards process. The entire point of something like FRAND is a basic market quid-pro-quo. By default, the owner of a patent has a tremendously strong monopoly on the specific design or methods described. However, that doesn't mean a market will necessarily develop for it, doesn't say anything about how big said market will be, and doesn't mean (in fact, a core part of the system) that others can't simply try to work around it (or not use it at all).

In a standards situation, the IP holder is gaining something and giving up something. They gain not merely an IP monopoly but a strong market monopoly, that in turn can drive vastly higher volumes then anything they could possibly manage on their own. They may also see ancillary benefits in terms of wide standards enabling higher order products and efficiencies. In exchange for this, they give up certain rights they'd normally have, such as the ability to withhold the patents entirely or to charge arbitrary fees. It's no fair getting the first bit, having all the guaranteed income from being in something like 3G, and later try to pull away from the second.

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Apple appears to have broken with this practice and wants to use its patents to exclude other vendors from the phone or tablet business.

Nope, design patents in particular are most commonly for a company's own benefit, that's the whole point of them. At least so far, there's no sign they're trying to "exclude other vendors from the phone or tablet business" rather then trying to "make sure they choose different visual design". And quite frankly that's doubly good, because Apple's visual design is not the be-all end-all in my opinion. Microsoft has done an excellent job (WebOS too) of showing how to do really different stuff, and how that can be a lot better then Apple's ideas. TouchWiz is not where I want to see things heading.

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Typically these FRAND promises have some kind of clause that requires mutual licensing of patents.

Again, I'd like to see some support for this, at least as far as the "typically". It's true that everyone who is actually part of a pool agrees to all not sue each other, and additionally to not be keeping any cards hidden either (so no joining the standards body, adding a patent and/or seeing what everyone is doing, then waiting a few years and going after everyone). But Apple has nothing whatsoever to do with the wireless technology side. They're just a user.

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Samsung might have some kind of case against Apple if Apple is not willing to license its patents to Samsung on the same kind of terms.

Doubtful unless Apple's are part of some general standard. Otherwise it's comparing two entirely different things.

Not that Apple may not lose anyway, or get trounced for other reasons, but I don't think that will be why.

Furthermore, Samsung's use of FRAND-encumbered patents against Apple could constitute a violation of antitrust laws both here and in the EU.

Someone please educate me. I thought in order for anti-trust issues to be levied, the accused has to possess dominance within the market in question?

If that's so, what's all these claims that iPhone is the highest selling individual mobile handset?

Serious questions; I just want to understand.

Apple sells about 20% of the worlds smartphones. They aren't dominant in sales.

But FRAND patents are patents that are required for the building of certain devices. In other words, Samsung could design a tablet or phone that looks a bit different, and sidestep Apple's patents, and their problem would go away. So Apple's patents prevent anyone from copying their design, it doesn't stop anyone from designing a tablet or phone.

But FRAND patents cover things such as the way a radio must function. Everyone building a radio needs to do it that way. There is no other way. therefor, the company that owns those patents can have anti-trust issues if it refuses to license those patents out equably. They are not allowed to use FRAND patents in lawsuits over other issues.

Samsung is retarded. First they blatantly copy Apple's design (which is one of Apple's primary differentiating factors as a brand), and when slapped in the face, they decide to "intensify" the fight.

Seriously Samsung, you got your ass handed to you for being a copycat. Better sit the $%&# down and know your place.

Apple filed a bunch of stupid suits without any real merit, so samsung filed a bunch of stupid suits without any real merit in return. It's pretty normal procedure among large tech companies. The stupid part is that these patents are essential to the 3G standard, so they are more restricted.

Stupid suits to you. But the courts don't agree.

I'm amazed at how many people don't respect IP.

Would you work for your company if they said you would be working for half the salary because some company is copying your work, and they can't afford to pay you fully anymore?

Or maybe, because sales are down because of it, they have to let you go?

Samsung is retarded. First they blatantly copy Apple's design (which is one of Apple's primary differentiating factors as a brand), and when slapped in the face, they decide to "intensify" the fight.

Seriously Samsung, you got your ass handed to you for being a copycat. Better sit the $%&# down and know your place.

Apple filed a bunch of stupid suits without any real merit, so samsung filed a bunch of stupid suits without any real merit in return. It's pretty normal procedure among large tech companies. The stupid part is that these patents are essential to the 3G standard, so they are more restricted.

Stupid suits to you. But the courts don't agree.

I'm amazed at how many people don't respect IP.

Would you work for your company if they said you would be working for half the salary because some company is copying your work, and they can't afford to pay you fully anymore?

Or maybe, because sales are down because of it, they have to let you go?

Actually, one court (Netherlands) agree with Samsung that Apple IP are flawed, and one (German) didn't think about being flawed or not, they just agreed that Samsung infringed the IP. So it's not "disrespecting" IP. It's mostly disrespecting flawed IP that should not been given in the first place.

Apple sells about 20% of the worlds smartphones. They aren't dominant in sales.

But FRAND patents are patents that are required for the building of certain devices. In other words, Samsung could design a tablet or phone that looks a bit different, and sidestep Apple's patents, and their problem would go away. So Apple's patents prevent anyone from copying their design, it doesn't stop anyone from designing a tablet or phone.

Well, it's quite likely that you couldn't build a tablet or phone that is remotely competitive without infringing Apple's patents. However, unlike '3G', 'smartphones that don't suck ass' is not an established standard, so Apple has the upper hand despite its patents likely having LESS merit.

Well, as far as design and looks go, Samsung is the only company that is copying them to that extent. In the German court, the judge mentioned all of the other companies that have tablets that don't copy Apple's designs. That proves you can build a tablet without making it mimic Apple's.

Competitiveness depends on more than just looks. But Samsung, and other companies that over the years copy the looks of other products do so with the hope that people will buy them not because it's always the best design, or the only way it can be made, but because of the reason why people buy copies of anything, whether it's a watch or a handbag. Because of the prestige, for one. And sometimes consumers aren't really thinking when they buy something and buy something because it looks like something else, in the mistaken belief that it IS that something else. Samsung knows these things. It's a deliberate attempt to deceive.